This is an appeal filed by the assessee directed against the order dt. 03.07.2012 of Ld.CIT(A)-XIII, New Delhi pertaining to the Assessment Year 2009-10.

2. The assessee is a company and is engaged in the business of importing cosmetics and deodorants from abroad and selling the same on whole sale basis. It filed electronically its return of income for the AY 2008-09 on 26.9.2009 declaring loss of Rs.4,42,58,124/-. The AO assessed the loss at Rs.4,27,59,362/- inter alia making disallowances on adhoc basis, being 20% of the training expenses, 10% out of repair and maintenance, 25% out of general expenses and software expenditure. ITA No. 5140/Del/2012 Elca Cosmetics Pvt.Ltd. AY 2009-10 2

3. Aggrieved the assessee carried the matter in appeal. The First Appellate Authority confirmed the order of AO. Further aggrieved the assessee is before us on the following grounds.  1.a) That the Commissioner of Income-tax(Appeals) has erred in upholding the addition of Rs. 3,34,577/- made by the assessing officer by disallowing 20% of travelling expenses of Rs. 16,72,885/-. b) That the Commissioner of Income-tax(Appeals) has erred in upholding the disallowance by holding that only ledger account of these expenses has been filed and that bills and vouchers for these expenses have not been filed. c) That the appellant was never called upon to produce the bills and vouchers for these expenses and the appellant had expressly stated that all the expenses are fully supported by the bills and the payments have been made by cheques only and are allowable in full. 2.a) That the Commissioner of Income-tax(Appeals) has erred in upholding the addition of Rs. 1,23,630/- made by the assessing officer by disallowing 10% of Repair & Maintenance expenses of Rs. 12,36,338/-. b) That the Commissioner of Income-tax(Appeals) has erred in upholding the disallowance by holding that only ledger account of these expenses has been filed and that bills and vouchers for these expenses have not been filed. c) That the appellant was never called upon to produce the bills and vouchers for these expenses and the appellant had expressly stated that all the expenses are fully supported by the bills and the payments have been made by cheques only and are allowable in full. 3.a) That the Commissioner of Income tax (Appeals) has erred in upholding the addition of Rs. 88,596/- by disallowing 25% of general expenses of . Rs. 3,54,385/-. b) That the Commissioner of Income tax(Appeals) has erred in upholding the disallowance by holding that only ledger account of these expenses has been filed and that bills and vouchers for these expenses have not been filed. c) That the appellant was never called upon to produce the bills and vouchers for these expenses and the appellant had expressly stated that all the expenses are fully supported by the bills and the payments have been made by cheques only and are allowable in full.

4. We have heard Mr.Deepak Chopra, the Ld.Counsel for the assessee and Smt.Parwinder Kaur, the Ld.Sr.D.R. on behalf of the Revenue. ITA No. 5140/Del/2012 Elca Cosmetics Pvt.Ltd. AY 2009-10 3

5. After hearing rival contentions, on perusal of material on record, order of lower authorities, case laws cited, we hold as follows.

6. The sum and substance of the assessee s submission is that the disallowance in question is made on an adhoc basis, and without any basis and such disallowances cannot be sustained. Reliance was placed on the following case laws. (i) JKH Export vs. ACIT (2013) 35 CCH 108 Mum Trib. ITAT Mumbai  J Bench in ITA no.137/Mum/2012 order dt. 31 st January, 2013 (ii) ACIT vs. Arthur Anderson & Co. (2005) 94 TTJ (Mum) 736 : (2006) 5 SOT 393 (Mumbai) - ITAT Mumbai  C Bench in ITA no.6192/Mum/2004 order dt. 31.12.2004 (iii) DCIT vs. Alidhara Texpro Engineers (P) Ltd., (2011) 43 SOT 1 (Ahd) Ahmedabad  C Bench of the ITAT in ITA nos. 1042 and 3591/Ahd/2007 for the AY 2003-04 and 2004-05.

7. The Ld.Counsel pointed out that the books of the assessee was not rejected and the AO has not brought out anything on record in support of his conclusion that the expenditure incurred was excessive.

7.1. The Ld.D.R. Smt.Parwinder Kaur on the other hand submitted that the assessee could not justify the expenses before the AO. She further submitted that bills and vouchers of these expenses have not been presented before the AO. She relied on the order of the AO.

7.2. The AO has made disallowances on the ground that the assessee only produced the ledger account of these expenses and has not produced bills and vouchers of these expenses. The assessee contended before the First Appellate Authority that its turnover has increased from Rs.12.73 crores to Rs.24.24 crores during the impugned AY and correspondingly the salaries have increased from Rs.1.8 to Rs.3.70 crores and training expenses have increased from Rs. 9.31 crores to Rs.16.73 crores. He further submitted ITA No. 5140/Del/2012 Elca Cosmetics Pvt.Ltd. AY 2009-10 4 that the AO has not called upon the assessee to produce bills and vouchers for the said expenses and pleaded that each and every expenditure is supported by bills and that payments were made by cheques. On the issue of repairs and maintenance expenditure, it was submitted that the bills and vouchers were not called for by the AO and under such circumstances no disallowance can be made, specifically when each and every payment is supported by bills and vouchers and when payments were made by cheques. Similar arguments were made on general expenses. The Ld.CIT(A) has not considered any of these contentions.

7.3. In our view such adhoc disallowances, when the turnover of the assessee company has doubled during the year, is not justified. The disallowances have been made in a very casual manner without proper justification. When the assessee has not been called upon to produce the vouchers, bills etc., the question of drawing adverse inferences on the ground that the same were not produced, does not arise. Be it as it may, the payments were claimed to have been made by cheques and this claim has not been contradicted by the Revenue authorities. On this factual matrix, we uphold the contentions of the assessee and delete the adhoc disallowance of 20% made on travel expenses, 10% made on repairs and maintenance expenses and 25% made on general expenses.

7.4. In the result the appeal of the assessee is allowed.

8. In the result, the appeal by the assessee stands allowed. Order pronounced in the Open Court on 11 th December,2014. Sd/- Sd/- (GEORGE GEORGE K) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: the 11 th December, ,2014 *manga ITA No. 5140/Del/2012 Elca Cosmetics Pvt.Ltd. AY 2009-10 5 Copy of the Order forwarded to:

1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Asst. Registrar